Suspension of IBC Provisions Extended by 3 Months
Finally, from 25th September,2020 onwards ,an extension of 3 months has been given towards the suspension of Section 7, 9 & 10 of IBC.
The 3 months will lapse on 25th December,2020.It is very much in line with an expectation as an additional 6 months would have been very high otherwise.
The sole reason behind this suspension is to save businesses from the wrath of insolvency. This is a welcome step especially when pandemic of Covid-19 has stalled almost every business and liquidity crunch is still an alarming issue. Hence, a further period of 3 months will be a big relief for the industries at large.
The another important question which needs to be addressed is as to whether after 3 months whether there will be a reduction of ceiling limit from Rs 1 Crore or it will remain the same.It is pertinent to note that in pre-Covid-19 era, two slabs i.e Rs 5 lakhs for MSME and Rs 25 lakhs for bigger units were being explored as per the recommendation of a task committee on the reforms of IBC.